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Cuba: Foreign Agribusiness Financing and Investment1
Maria Antonia Fernandez Mayo and James E. Ross2
Abstract
This paper contains information on the climate
for foreign investment in Cuba, as well as the laws,
policies, and regulations affecting foreign
agribusiness investment. Information is also
provided on specific foreign financing and
investments in citrus, tobacco, sugar, non-export
crops, livestock and poultry, processed foods, and
beverages. The final section considers factors that
will affect foreign financing and investment
following normalization of U.S. and Cuban relations.
Information and data most recently available on
foreign financing and investment in Cuba's
agricultural, sugar, and food industries are
summarized. To a large extent, it is a revision of
"Cuba: Overview of Foreign Agribusiness
Investment" (IW97-10). Readers may wish to refer
to IW97-10 for additional detail. It should be noted
that some data have been changed, and information
presented in this paper should supersede that
contained in IW97-10.
Preface
Cuba has entered into a process of economic
reform which, combined with other factors, may lead
to the restoration of diplomatic and commercial
relations with the United States. Given the striking
similarity between historical agricultural production
patterns in Cuba and Florida, and the extensive
volume of agricultural trade between the United
States and Cuba prior to 1960, agricultural producers
and processors in Cuba, Florida, and throughout the
United States are likely to face both challenges and
opportunities if, and when, the U.S. economic
sanctions against Cuba are lifted.
Available information and data on foreign
financing and investment in Cuba's agricultural,
sugar, and food industries are summarized. To a
large extent, it is a revision of "Cuba: Overview of
Foreign Agribusiness Investment" (IW97-10).
Readers may wish to refer to IW97-10 for additional
detail. It should be noted that some data have been
changed, and information presented in this paper
should supersede that contained in IW97-10.
With the support of the John D. and Catherine T.
MacArthur Foundation, this research is being
conducted via a program of active collaboration
between the University of Florida's International
Trade and Development Center (IATDC) and the
University of Havana's Center for Research on the
International Economy [Centro de Investigaciones de
Economía Internacional (CIEI)]. The MacArthur
Foundation support has been a pivotal element of this
1. This is International Working Paper IW98-7. Please visit the EDIS Web site at http://edis.ifas.ufl.edu.
2. Maria Antonia Fernandez Mayo, associate researcher, Center for Research on the International Economy, University of Havana, Cuba; and James E. Ross,
courtesy professor and program advisor, International Trade and Development Center, Department of Food and Resource Economics, University of
Florida, Gainesville, Florida.
The Institute of Food and Agricultural Sciences is an equal opportunity/affirmative action employer authorized to provide research, educational
information and other services only to individuals and institutions that function without regard to race, color, sex, age, handicap, or national origin.
For information on obtaining other extension publications, contact your county Cooperative Extension Service office. Florida Cooperative
Extension Service/Institute of Food and Agricultural Sciences/University of Florida/Christine Taylor Waddill, Dean.
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Cuba: Foreign Agribusiness Financing and Investment
research project and is hereby very gratefully
acknowledged.
A preliminary and important part of this research
was the identification of potential commodities, or
groups of commodities, that would become likely
candidates for trade or investment once commercial
relations between the two countries are resumed.
Five groups are identified:
• sugar;
• citrus—grapefruit, lemon, lima, orange and
tangerine;
• vegetables—cabbage, calabaza
(pumpkin), cucumber, garlic, lettuce,
onion, pepper, plantain and tomato; roots
and tubers—boniato (sweet potato),
malanga (taro), potato and yucca (cassava);
• tropical fruits—avocado, coconut, guava,
mango, papaya and pineapple; and
2
Cuba. U.S. policy also discourages other countries
from investing in Cuba; however, significant
agribusiness investment by U.S. allies has taken
place.
This study provides data on agribusiness
financing and investment in Cuba by U.S. trading
partners. Information is presented on the climate for
all investments currently being made in Cuba. In
addition, the paper covers laws, policies and
regulations affecting foreign investment, especially
those designed to encourage foreign financing and
investment in agribusiness.
Introduction
At the end of the 19th century, U.S. investment
in Cuba amounted to $50 million out of a total
foreign investment of $700 million. Beginning
around 1914, investments from the United States
began to penetrate the island with renewed force.
While diversified, U.S. investments were principally
in agriculture, especially the sugar industry.
• fisheries and aquaculture.
The next step consisted of conducting a
thorough diagnostic of each of these commodity
sectors in Florida and Cuba. These diagnostic studies
provide the bases for the third part of the research: a
series of publications that assess the potential
competition and complementarity between Cuba and
Florida that could occur if economic sanctions
against Cuba were lifted.
Summary data and information from this paper
were presented by the authors at a conference held at
the Cosmos Club in Washington, DC, March 31,
1998, entitled "Role of the Agricultural Sector in
Cuba's Integration into the Global Economy and its
Future Economic Structures: Implications for Florida
and U.S. Agriculture." The conference presented the
results of research conducted jointly by IATDC
(Florida) and the CIEI (Cuba). The National Center
for Food and Agricultural Policy co-sponsored the
conference.
Work on the project, which was conducted
jointly by the University of Florida and the
University of Havana, recognizes that U.S. policy
presently precludes U.S. financing and investment in
By 1950 the bulk of direct U.S. investments in
Cuba were in agriculture and amounted to $263
million (40% of the total foreign investment in
Cuba). An additional $54 million was invested by
U.S. firms in manufacturing. By 1958 the total direct
U.S. investment in Cuba had risen to more than $1
billion.
U.S. direct investment in Cuba had become more
diversified by the late 1950s. In the sugar sector,
approximately 40 percent of Cuba's sugar production
was due to U.S. investment capital, as compared to
over 60 percent in 1925. These data illustrate the
close investment ties that Cuba and the United States
maintained for more than 50 years.3
In general, U.S. investments in Cuba before the
1959 revolution were diversified and present in most
economic areas of the country. In the agricultural
sector, in addition to the sugar and tobacco industries,
there were numerous small agribusiness investors,
including those from Cuba as well as the United
States. Small investors were involved with
production of rice, oilseeds, tomatoes, swine,
poultry, and cattle—both beef and dairy.
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Cuba: Foreign Agribusiness Financing and Investment
Foreign Investment Climate
After the Castro administration took over in
1959 and until the end of the 1980s, no foreign
investment of any kind (only credit and favorable
trade agreements) was made in Cuba. This was due
to the country's commercial and industrial economic
maintenance via the former USSR and the former
socialist countries of Eastern Europe. These relations
were based on the exchange of special conditions for
credit for development as well as preferential trade in
certain export products.
After a change in the trade conditions with these
countries, Cuba confronted, for the first time in three
decades, the challenges of the rules of an unfamiliar
market. Until that time, only 15 percent of the capital
was free flow cash, and 85 percent was produced with
the Consejo Ayuda Mutual Economica
(COMECON) under the conditions mentioned
above.
In the period 1925 through 1958, 68 percent of
Cuba's trade had been with the United States. This
trade situation was similarly repeated in the 1960s,
but this time with the former USSR and former
socialist countries instead of with the United States.
Decree Law No. 55 - Regulation of Joint
International Ventures
It was not until the end of the 1980s, after 30
years during which foreign investment in Cuba was
virtually null, that the government began to actively
promote the development of enterprises, in
conjunction with national and foreign entities, as
well as extending its commercial relations towards
other parts of the world.
On February 15, 1982, Decree Law No. 50 was
submitted as the document to specifically regulate
joint international ventures. It allowed for the
establishment of business associations and other
forms of economic associations within the country,
using Cuban and foreign capital. It further
guaranteed full endorsement per the modifications
introduced in July of 1992 in the republic's
constitution.
3
Modifications in the constitution and former
economic reforms realized in the country
demonstrated that Decree Law No. 50 did not
guarantee an adequate flow of capital to the island
since, due to the nonexistence of a favorable attitude
towards foreign investment in Cuba in the years after
1959, potential investors were hesitant to finance
projects in Cuba. It was therefore necessary to create
a more flexible law that would provide more
attractive financial and fiscal incentives.
In the beginning, the surge towards mixed
economic associations was primarily motivated by
the necessity to access resources, markets, and
technologies. The former evolution of this process
was also associated with changes in yet to be
developed economic mechanisms. Mixed businesses
in Cuba represented the transformation of the
economy from a highly centralized design into an
economy that now combines two models for its
function—national or state and mixed.
Law No. 77 - Law of Foreign Investment
On September 5, 1995, the National Assembly
of Popular Power in the Republic of Cuba
unanimously approved Law No. 77 – The Law of
Foreign Investment.4 This legislation replaced the
provisions of Decree Law No. 50. The express
objectives of Law No. 77 is to promote and provide
incentives to foreign investors; bring greater security
and guarantees to investors; improve fundamental
development of the country; and allow for national
economic recovery, financial resources,
technologies, and new markets in various productive
areas to include those providing services, with the
exception of health, public education, and the armed
forces.
Law No. 77, with its 58 articles grouped within
17 chapters, provides guarantees to foreign investors.
It specifies the areas to which investments may be
destined and defines the manifestations and forms of
foreign investments. It addresses investment in real
estate, and stipulates the process of negotiation and
authorization of foreign investment in banking,
labor, export, import, taxes, and duties, as well as
duty free zones and industrial parks, protection of the
environment, etc.
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Cuba: Foreign Agribusiness Financing and Investment
The guarantees to investors are considered by
Cuban officials to provide ample protection and
security. In the extreme case of an expropriation for
reason of public utilities or social interest, there is a
defined, previously agreed upon indemnity in cash
for the value of the established business. If there is a
discrepancy, the established cost will be determined
by an established international organization dealing
in the value of businesses.
One of the guarantees provided is protection
against third party claims, which must conform to the
duties, laws, and tribunals of the Cuban judicial
system. In addition, any and all net dividends and
interests gained from these investments may be
freely transferred in cash outside the country. As of
April 1998, Agreements of Promotion and Protection
of Investments had been signed by Cuba and 24
countries—Argentina, Barbados, Bolivia, Chile,
China, Colombia, Czechoslovakia, Ecuador, France,
Germany, Great Britain, Greece, Italy, Laos,
Lebanon, Romania, Russia, South Africa,
Switzerland, Spain, Ukraine, Venezuela, and
Vietnam.5
Forms of Investment. Investments may be
direct or indirect, as long as the foreign investor
participates in an effective form or through stocks or
other values. The investments may take the
following forms:
• Mixed Enterprise. A Cuban mercantile
business that adopts incorporation with
shares of stock in which one or more
participating stockholders is a foreign
investor.
• Contract for International Economic
Association. An agreement or pact between
one or more national investors and one or
more foreign investors to realize, in
conjunction with each other, appropriate
acts of an international economic
association, without allocating judicial
specifics.
• Enterprise Composed Exclusively of
Foreign Capital. A business enterprise
composed of foreign monies, without the
participation of a national investor.
4
Authorization. The levels of investment
authorization delegated to the Executive Committee
of the Council of Ministers include: when the
investments are equivalent to $10 million, or
completely foreign, or deal with public services such
as transportation or communications, or pertain to a
foreign enterprise with capital from a foreign state, or
deal with the exploitation of a natural resource, or
implicate the transfer of the country's property, or
deal with the enterprising aspects of the armed
forces. All other investment authorizations are
delegated to governmental committees designated by
the Executive Committee.
Negotiations. Negotiations begin with a
meeting between the potential investor and the
appropriate national investor. Both parties'
proposals must be presented to the Ministry of
Investments and Economic Collaboration for proper
transaction. In the case of totally foreign
investments, proposals are directed to the Ministry
for identifying the proper Cuban entities responsible
for analyzing and approving the proposal. Totally
foreign investments have a 60-day waiting period
from the date of presentation (the waiting period is
the same whether decisions are positive or negative),
and all decisions must be substantiated.
Banking. With regard to the banking regime,
mixed enterprises, foreign investors, and national
investors participating in contractual international
economic agreements (be it individually or in
conjunction with others), as well as enterprises
whose sole capital is foreign, must have accounts (in
totally exchangeable funds) within a bank in the
national banking system. All payments and charges
are handled by the national banking system.
Export and Import. Mixed enterprises,
national and foreign investors in contractual
international economic agreements, and enterprises
whose sole capital is foreign have the right, within
the agreements established, to export their products
directly and to import directly all items necessary for
the production of their end product.
Labor. Foreign investors must comply with
labor and social security laws in effect in Cuba and
all the implications of these laws. Laborers who
perform services pertaining to foreign investors will
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Cuba: Foreign Agribusiness Financing and Investment
be, as a general rule, Cubans or foreign permanent
residents of Cuba. Nevertheless, the directors and
administrators of mixed enterprises, or enterprises
whose sole capital is foreign, or enterprises in
contractual international economic agreements may
decide that certain administrative or technical
positions may be assumed by persons who are
non-permanent residents of the country.
Non-permanent Cuban residents who may be hired
are subject to the laws of immigration and alien
residency. Payment to Cuban citizens and foreign
permanent residents of Cuba will be made in national
currency, which has been previously obtained from
convertible dividends, with the exception as cited in
Article 27 of this law. The employing entity will
individually contract with the workers and foreign
permanent residents providing the labor. The
employing entity will pay these workers the monies
owed for such labor.
Ownership of Intangibles. Any resulting
technological innovations or intangible estates
obtained, within the framework of an international
economic association or through Cuban laborers in
an enterprise whose sole capital is foreign, are
regulated by the legislation under which they fall.
Taxes and Duties. With regard to special taxes
and duties, mixed enterprises, foreign investors, and
national investors in contractual agreement with an
international economic association will be subject to
the payment of the following fiscal obligations:
• taxes on utilities,
5
• the tax on utilities will be 30 percent of the
net total. In cases where it is in the country's
best interest, the Executive Committee of the
Council of Ministers may waive part or all of
this tax if they are to be reinvested in the
country;
• the tax may be raised to 50 percent by the
Executive Committee if the exploitation of
natural resources are involved, whether the
resources are renewable or not; and
• with regard to labor taxes and social
security contributions, the following is
established—11 percent labor tax and 14
percent social security contribution (rates
based on total salaries and other incomes
incured by employees with the exception of
monies paid to employees as an economic
bonus).
Registration. All foreign investors, once
authorized and before beginning operations, must
register with the Chamber of Commerce of the
Republic of Cuba.
Additional Provisions. Three novel points are
inserted within Law No. 77. The first point refers to
the possibility of investments in and the acquisition
of property or real estate (apartments, buildings,
offices, etc) and the development of tourism. The
second point refers to the inclusion of any new and
stimulating export or international business entity
(duty free zones). And the third point refers to
participation in the development of industrial parks.
• taxes on labor and social security,
• duties and other costs with regard to
Customs,
• taxes on vehicles that cause damage or
burden property or possession of motorized
land vehicles, and
• taxes on documents that deal with rates
and rights of solicitation, securing or
changing said documents.
Law No. 77 provides that the payment of taxes
by the aforementioned persons and entities will have
the following benefits:
The last two points must comply with all the
provisions contained in Decree Law No. 165 of 1997.
Elements of Foreign Agribusiness
Investment
This section contains general information
pertaining to elements of law, policies, and practices
of foreign investment in Cuba's agricultural, food,
sugar, and seafood industries.
Comments are based on a hypothetical scenario
concerning business opportunities and foreign
investments that could be undertaken with
enterprises in Florida and other interested regions of
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Cuba: Foreign Agribusiness Financing and Investment
the United States, under the provisions of Law No.
77, assuming a situation in which there is a partial or
total lifting of U.S. economic sanctions on
agribusiness investment in Cuba.
The scenario is based also on the following
points:
• The legal framework of the Law of
Foreign Investment in Cuba does not
discriminate against investors, including
those of the United States.
• Products included in the scenario are those
being studied by the cooperative project
between the University of Florida and the
University of Havana such as citrus,
tropical fruits, vegetables, tubers and roots,
fisheries, etc.
• Some enterprises in Florida and other U.S.
states have indicated an interest to begin
negotiations with Cuba in the agricultural,
sugar, food, and seafood sectors.
• Agribusiness firms in Florida and other
U.S. states have the capacity to execute
steps needed to revitalize the areas under
study (agricultural production, commodity
processing and marketing, and fisheries).
• Cuban enterprises have experience with
firms in other countries, especially Central
American and Caribbean countries, in
developing contracts directed at improving
Cuban agriculture. This experience could
be useful in the production and marketing
of export items that would meet the product
quality required by Florida and other U.S.
markets.
• Geographic proximity between the United
States and Cuba could result in lower
agricultural production and marketing
costs.
• Production in Cuba has the potential to fill
"market windows" in foreign markets that
cannot be met by U.S. agribusiness.
6
Current Situation
As with other low income countries, Cuba's
basic objective in providing foreign investment
opportunities is to introduce new technology,
markets, and capital into its economy. Cuban
officials believe it is unnecessary for all international
economic associations to be large. They may be
small- or medium-sized, as long as they satisfy one
of the basic objectives of foreign investment stated
above. Seventy-five percent of the mixed enterprises
registered in Cuba have a capital investment of less
than $5 million.8 To bring more investments into
their country, Cuban officials have stated that they
will analyze all proposals from foreign investors.
As of April 1998, nearly 10 years after its
enactment, Law No. 77 has permitted the approval
and activation of 317 international economic
associations. This number does not include the
associations established under Decree Law No. 165,
which provide for duty free zones and industrial
parks—190 total, with 140 in commercial
undertakings.
The bulk of foreign capital for financing and
direct investment is from Spain, Canada, Italy,
Mexico, Holland, and the United Kingdom. Nearly
74 percent of the associations have been established
through firms in those countries. In accordance with
U.S. policy, no associations have been established
with U.S. investors. Of the 317 international
economic associations that have been established, 63
associations have been dissolved.
According to the Cuban government, the basic
economic activities requiring capital are
petroleum/oil drilling, nickel and other mining,
tourism, basic industries, transportation, and
communications. Investments in the agricultural and
fisheries sectors are considered insufficient, but are
no less important for development. Imports of
high-quality food should decrease as domestic
production increases in Cuba.
Long-Term Considerations
Cuba's long-term strategy has been to reduce its
dependency on importation of food items. It is a goal
that has not been achieved. In 1989 more than 50
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Cuba: Foreign Agribusiness Financing and Investment
percent of the calories and 55 percent of the proteins
consumed were imported (directly or indirectly).
Food imports as a percentage of total imports in
1989 were 11 percent, compared to 21 percent in
1995.9
At the present time, the dependency on
importation of food items has increased even more
than the overall percentage change. Approximately
46 percent of the energy and 63 percent10 of the
proteins provided from food come from imported
products. To revitalize areas with the capability of
supplying adequate levels of food, it will be
necessary to have a cash flow, to train producers in
advanced technologies, and to market agricultural
commodities and their processed products.
Cuba has proposed that Floridian enterprises
could become the direct or indirect administrators of
Cuban farming, agricultural industries, and fishing
through financial or economic associations (joint
ventures or international economic associations).
The flow of agribusiness products could increase
significantly in future endeavors between both
countries.
Any commercial endeavor with countries in the
Caribbean and Central America is privileged. There
are financial arrangements between these countries
and Cuba to incorporate within this investment
modality such products as sugar, tobacco, rice, and
tomatoes. Such is the case for 17 mixed enterprises,
contracts for economic association, collaborations,
and programs in vegetables, citrus, grains, flowers,
and ornamental plants.
According to Cuban officials, Cuba's foreign
investment policy favors small- and medium-sized
businesses. Currently, however, most of Cuba's
agriculture is administered or operated by large
enterprises—state farms, agricultural cooperatives,
Basic Units of Cooperative Production (UBPCs),
Credit and Service Cooperatives (CCS), and the
Working Youth Army (EJT). Private peasant
farming accounts for only a small percentage of
Cuba's agricultural production.
To effectively substitute the imported food
items, Cuban officials plan to use whatever
investments are offered in this venue to revitalize
7
local production. They will import only those
products that truly cannot be guaranteed as part of
the local production, subject to natural conditions or
unusual costs.
Geographic and Climatic Elements
Primarily because of Cuba's geographic
location, tourism has become a principal source of
foreign exchange for Cuba. For the Caribbean,
tourism represents 26 percent of the fiscal holdings
and 60 percent of the region's Gross Domestic
Product (GDP), which is its principal economic
sector, generating 22 percent of the employment and
76 percent of the investments. In 1996 the Caribbean
tourist industry generated $13.3 billion.15
Foreign capital needed for the development of
tourism in Cuba is estimated at more than $500
million. Construction of additional tourist
accommodations will provide growth in tourism of
around one billion dollars in the coming years.16
This increase in tourism signifies a wealth of
opportunities for new enterprises created through
associations with foreign capital. Of special interest
to Cuba, are food items generated from farming,
processed foods, beverages, and fish products.
In addition, there are other opportunities
generated by the development of tourism in Cuba
such as linens, hotels, furniture, household goods,
accessories, etc. According to the Cuban
government, investors in these ventures will find in
Cuba a secure demand, combined with the island's
favorable geographical location. Cuba provides easy
access to Caribbean markets, a region frequented by
more than 15 million tourists per year.
A basic premise for foreign agribusiness
investors to consider is that the climate in Cuba
fosters agricultural production throughout the year.
This allows for the planting and harvesting of
vegetables, fruit, tubers and roots, grains, and other
fresh and processed agricultural products, with the
goal of placing them on national and international
markets at the most favorable times.
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Cuba: Foreign Agribusiness Financing and Investment
Elements Particular to the Agricultural
Sector
In the area of agribusiness, in particular, foreign
investors must keep in mind some basic points in
order to evaluate the worthiness of a joint venture.
Considerations include working capital for the
acquisition of administrative resources and payroll,
as well as accounts payable pertaining to production,
distribution of production on the international
market, and access to adequate technology and/or
technological knowledge for agribusiness
undertakings.
Modalities, under which an international
economic association can be created in Cuban
agriculture, are varied. According to Cuban officials,
there exists a great flexibility in possible business
partnerships. Some typical variations are as
follows:
• Commercial Association. The foreign
counterpart advances funds to the
"Association" for the acquisition of
administrative and material resources
needed by Cuban agribusiness enterprises.
Marketing end products is realized through
distribution channels that are also funded
by the foreign counterpart.
• Production and Commercialization
Association. The foreign counterpart is
involved in the complete production and
marketing process. That is, it participates in
the effort, administration, and
implementation of the project in areas
defined and linked directly to the
"Association" along with all of its risks.
The Association can rent areas to benefit
the whole of agriculture, and conducts the
necessary investments for this end. the
commercialization of end products will be
via distribution channels established by the
foreign counterpart. The national Cuban
market will also have access in whatever
capacity is feasible.
Agribusiness investment economic associations
can be established with distinct Cuban entities that
fit the criteria. One option is the Ministry of
8
Agriculture's Union Nacional de Acopio (Acopio).
Acopio is the entity in charge of the collection,
distribution, and commercialization of Cuba's
agricultural products on all levels. It has 14 offices
(one in each province) and 164 establishments for
the acquisition, distribution, and sale of agricultural
products.
Elements Particular to the Food Industry
Like the agricultural sector, the food industry
has its own policies for foreign investment. There
are 16 enterprises associated with Coralsa, S.A. (an
agency of the Ministry of Food Industry and similar
to Acopio). Coralsa's enterprises have stockholding
provisions. Stockholder shares generate 40-50
percent of the assets.
Coralsa's entities are the result of an
organizational restructuring in 1995. The goal is to
fortify sales, the economy, and the finances of the
companies with which they are associated. The
companies associated with Coralsa produce and
distribute candies, confectioneries, wheat-derived
products, instant beverages, wines, beers,
refreshments, and mineral waters, as well as
technical and refrigeration equipment necessary to
the food industry.
The basic foreign investment policies for the
Food Industry are in accordance with the legislation
established by Law No. 77, although its
implementation presents some unique aspects
particularly inherent to the interests of food
industries. Foreign investment in the food industry is
to prohibit complete foreign investment; to allow for
mainly Cuban participation; to give preference to
foreign investments, which amounts to more than $1
million; to permit investors to recuperate their
investments and make reasonable profits; and to
support investors who provide connections with
outside markets.
An important consideration is the fact that the
food industry depends to a large extent on domestic
agricultural production, and that the agricultural
sector has been unable to meet the raw material
supply needs of the country's food industry. This is
the current situation for every agricultural product
for which Cuba has food processing capabilities.
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Cuba: Foreign Agribusiness Financing and Investment
Elements Particular to the Sugar Sector
The Cuban sugar industry has existed for over
four centuries. In the 1960s and 1970s, important
investments were undertaken to produce an annual
average of 7.5 and 8 millon metric tons of sugar
during 1981-1985 and 1986-1990, respectively.17
The sugar industry has 156 sugar mills, with more
than 1.5 million acres dedicated to sugarcane
cultivation (4,200 mechanical harvesters and 930
sugarcane cleaning stations), and employs nearly
400,000 workers (16,000 are mid- and high-level
technicians).
The sugar sector is in need of administration,
technology, and equipment that can be produced in
Cuba through combined business efforts. According
to Cuban officials, the sugarcane industry in the
Province of Las Tunas represents an excellent
business opportunity for enterprises from Florida.
Elements Particular to the Fisheries Sector
Reorganization of the fisheries sector in Cuba
provides the opportunity to develop new world
markets. Important investments have increased the
exports of fisheries products. Reinvestment has
reached all levels of production, with refrigeration
and international health standards being required for
packing and shipment.
Basic policies of investment and specified
modalities for other sectors also apply to the fisheries
industry. In addition to Caribx, S.A., which is the
traditional exporter of fisheries products, two other
businesses have become major participants in the
fisheries sector—Pesca Caribe and Pescatlan, S.A.
General Considerations
An export tradition has been maintained
throughout the years in the production of sugar,
citrus, fish, and other agricultural products. In the
period through 1990, important export volumes were
achieved. With strong national and foreign
investment support, regional and national markets
could be expanded.
Cuban officials believe it would benefit both
parties for Cuba to maintain the administration of
deficit areas, be it through commerce or the
9
establishment of associations with local producers, to
activate agricultural production and to export
products to markets in Florida, etc.
Livestock industry growth, in general, depends
on adequate provisions of feed. Products such as
corn, wheat, oats, and rye constitute the area with the
greatest deficiency, but with good investment
potential.
Previously, many food and feed items were
acquired from markets of the former USSR and the
Eastern European countries. Trade was affected
when the conditions of commerce in these markets
changed. Imports of grain for animal consumption
and protein feed of vegetable and animal origin were
especially important during the 1981-1989 period.
Important quantities of onions, potatoes, beans, corn,
and rice have been imported. However, climate, soil,
and experience favor local cultivation.
Imports declined between 1991 and 1993. For
the majority of the products discussed above, imports
were 50-75 percent less and in some cases
disappeared. These former levels have not been
regained and total imports are now only about 30
percent of those in 1989.18
Because the necessary feed is not being
produced in Cuba, recuperation of the livestock
industry can only be achieved through the
incorporation of foreign participation. Although
there are some national substitutes, they are
insufficient nor do they provide the required
nutrients for the production of milk or meat.
Therefore, in a period following the lifting of
economic sanctions, there should be some excellent
business opportunities for enterprises experienced in
the production of pork, fowl, beef, etc.19
Fertilizers and pesticides constitute the pillars
that greatly affect the production of all agricultural
products. As mentioned in the food section, the
production of meats, fruits, and vegetables is greatly
affected by the deficit of raw materials and
equipment. Currently, an investment opportunity, in
conjunction with the Fertilizer Factory of
Cienfuegos, is being promoted for the production of
fertilizers in Cuba .
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Cuba: Foreign Agribusiness Financing and Investment
Another product of great importance is rice,
which is a principal component in the Cuban diet.
Production could be supported through contractual
associations with businesses in Florida and/or other
U.S. states. Economic associations and financial
arrangements are being conducted with other
countries such as China and the United Kingdom.
The level of rice imports during the 1981-1989
period was 230,000 tons.20
Although Cuba plans to produce 550,000 tons of
rice in the near future, this amount would only
guarantee the minimum standard for the populace.
Production in 1997 was between 300,000 and
340,000 tons. The difference between what Cuba
produces and consumes is imported. Rice is one of
the few products for which a viable local market is
being offered, and is a favorable element for
investors.
Other deficit products, which have been
imported, are wheat flour, yeast, cans, cartons, and
cardboard. All of these products play a part, directly
or indirectly, in nutrition and their deficits affect the
Cuban agricultural industry.
Current Foreign Agribusiness
Financing and Investment
There is over $5 billion in foreign financing and
investment in all sectors of Cuba's economy. More
than 90 percent of these foreign investments come
from Spain, Canada, Italy, France, Mexico, the
Netherlands, and the United Kingdom—seven of the
55 countries with registered "international
associations."
According to Cuban officials, international
economic associations have been constituted in 34
different branches and sectors of Cuba's economy.
Over 90 percent of these "associations" have been
established since 1992. Tourism, mining,
telecommunications, and "basic industry" are the
major areas of investment.
Foreign financing and investment in agriculture
and related businesses are relatively small. However,
available information indicates a continuing and
significant interest in Cuba among international
agribusiness investors. About 10 percent of Cuba's
10
recorded foreign "international economic
associations" involves agribusiness.
Companies from Israel and Chile have
substantial financing and investment arrangements
with the Cuban government for the production,
processing, and marketing of citrus. Firms from
Spain, France, and the United Kingdom have
significant credit and investment agreements for
tobacco production, manufacturing, and marketing,
while investors from Canada, Italy, France, Holland,
and Russia have provided considerable credit or
made notable investments in sugarcane, vegetables,
rice, African palm, processed foods, beer, rum, and
mineral water.
Citrus
One of the first projects in agriculture using
foreign capital and expertise was an agreement
between an Israeli corporation and the Cuban
National Citrus Corporation (Corporacion Nacional
de Citricos). The Israeli investment was made in
1990 through the BM Corporation, which is
registered in Panama. It is an international economic
association contract, not a joint venture, located 140
kilometers east of Havana in Jaguey Grande (Table
1).
The objective of the project was to increase
productivity and improve the quality of citrus being
produced on 38,750 hectares—considered the largest
contiguous citrus grove in the world. While the
agreement was made in 1990, the project was
initiated in the 1960s. When Cuba broke diplomatic
relations with Israel, the project ended. It was
re-initiated after more than two decades. The Israeli
investment reportedly is $22 million. Fruit is
marketed under the brand name "Cubanita."
In 1997 the mixed Cuban-Israeli enterprise
reportedly produced 36 percent of the country's total
citrus production—303,685 tons of the total 843,700
tons. An additional 58 percent (490,000 tons) was
produced by two enterprises administered by the
military (Ejercito Juvenil del Trabajo) in the Jaguey
Grande area and on the Isle of Youth. Thus, the three
operations accounted for nearly all (96%) of the
country's commercial citrus production.
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Cuba: Foreign Agribusiness Financing and Investment
A second international economic association of
the National Citrus Corporation involves citrus
processing. It is a contract agreement, not a joint
venture, with the INGELCO Company of Chile. The
project, also located in Jaguey Grande, processes
citrus and non-citrus products for the domestic dollar
market, tourism, and nearby export markets. Thirty
million liters of citrus juice are processed annually
under the brand name "Tropical Island."
The project, which began operations in 1992,
uses packaging technology from the Swedish firm
Tetrapack. Processing equipment was purchased
through external credit and is being paid back by
income from the project. Also, a percentage of sales
revenue is being paid to the BM Group because of its
exclusive right to operate in Jaguey Grande. Any
surplus belonging to the Cuban partner is paid
directly to the National Citrus Corporation.
In addition to the international economic
associations formed with the BM and INGELCO
groups, the National Citrus Corporation in 1991
established an economic association with POLE, a
Chilean firm. Citrus, mainly grapefruit, was
produced on 11,000 hectares on the Isle of Youth
(Isla de la Juventud) until the agreement was
terminated in 1996 (Table 2).
A second citrus project that has been terminated
was a joint venture between the National Citrus
Corporation and Lola Fruit S.A. Lola Fruit was
created in May 1993 by Lomar Shipping Ltd. (U.K.)
and the Lavina Shipping Corporation (Greece). Lola
Fruit leased 31,000 hectares of oranges, grapefruit,
and limes in Ciego de Avila from the Cuban National
Citrus Corporation. A juice factory, producing
frozen concentrate and oil extract, controlled an
additional 14,000 hectares in the central area of
Cuba.
When all foreign economic associations were in
operation, the citrus area covered by international
economic associations totaled an estimated 80,000
hectares. This was more than one-half of the
country's total production area in citrus. Currently,
the Cuban-Israeli international economic association
involves more than one-fourth of the citrus area, and
accounts for more than one-third of total production.
11
Tobacco
Tobacco production and manufacturing is also
an important area in terms of foreign financing and
investment. Economic associations in tobacco
involve production, manufacturing, and marketing.
Pre-financing agreements were signed in 1994 with
two state tobacco monopolies, Tabacalera of Spain
and Seita of France. These two agreements bind a
large part of Cuba's tobacco exports (Table 3).
Tabacalera reportedly agreed to pre-finance
one-half of the Cuban tobacco harvest. One source
reported that Tabacalera had agreed to provide $25
million per year to finance inputs and market tobacco
from 21,875 hectares in Pinar del Rio. Another
source said the agreement was worth $30 million and
included a supply of 25,000 tons of fertilizer, fuel
and lubricants and parts for 350 tractors.
Seita of France is reported to be providing a
$3.5 to $4 million line of credit to finance inputs and
market tobacco in France. Holland's Lipoelif is also
reported to be a provider of credit for harvest of
Cuba's tobacco crop.
Another international economic association
involving tobacco is a joint venture. It was formed in
1996 between the Cuban Tobacco Union and Souza
Crus, a Brazilian subsidiary of the British-American
Tobacco Company. The joint venture factory in
Havana, BrasCuba, has six production lines
producing 15,000 cigarettes per minute. Plans are to
expand production to five billion units per year.
Cigarettes are being exported under the Brazilian
brand name "Continental." The Cuban brand,
"Popular," is being produced for the domestic
market. An initial investment, reportedly $10
million, was expected to be recovered in three
years.
Production of tobacco in 1997 enabled Cuba's
export-oriented cigar industry to produce
approximately 250 million units. For the harvest
ending in May 1996, tobacco production permitted
the industry to produce 193 million cigars. Data for
1995 indicate only 60 million cigars were
manufactured. Thus, according to data available, the
manufacture of cigars quadrupled during the past
two years—1996 and 1997.
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Cuba: Foreign Agribusiness Financing and Investment
The financing of production inputs by foreign
sources has helped Cuba to increase tobacco output
from 25,000 metric tons in 1995 to 33,100 in 1996
and 50,000 in 1997. Consequently, sales of
manufactured tobacco products abroad have
increased significantly. Tobacco leaves and tobacco
products now account for nearly six percent of
Cuba's total exports.
Sugar
Cuba's sugar industry is a relatively new
agribusiness area to be opened to foreign investment.
In 1994, because of the scarcity of resources and the
difficult situation facing the industry, foreign
investment in the sugar sector was opened to
arrangements for international economic
associations. Cuban efforts to encourage foreign
investment in sugar have focused on financing
production and marketing of sugarcane
derivatives—not on the acquisition of assets such as
sugar mills and refineries.
Eight "territorial financing programs" were
established for sugarcane production with
international sugar producers and financial
institutions. Beginning with the 1995-96 sugarcane
crop, an estimated $200 million was secured from
European sources for the pre-financing of essential
inputs such as petroleum products and fertilizers.
Credits were provided by the Netherlands' ING
Bank; Britain's ED&F Man Sugar, and the
Anglo-Dutch company, VITOL, as well as French
financial institutions (Table 4).
The terms of financing reportedly reflected the
risk involved—three years at 15 percent. The
principal was to be repaid from sugar proceeds in the
first year, while one-half of the interest payment was
to be paid in the second year and the remainder in the
third year.
It was estimated that production of sugar would
need to increase one million tons to cover the
pre-financing cost. With sugar production in
1995-96 at 4.45 million metric tons, the estimated
increase was achieved. Production the year before
was 3.3 million metric tons.
12
For the 1996-97 sugarcane crop, the Ministry of
Sugar reportedly sought $60 million in additional
financing. Investors, in addition to repayment of
principal and interest payments, were to receive 25
percent of the profits from increased production over
the average of the previous two harvests. They also
were to be given the first option to sell inputs to the
industry at competitive prices. Sugar production for
the 1996-97 season however did not increase. Output
was estimated at 4.2 million metric tons. A delay in
completing sugarcane plantings and the extended
1995-96 harvest were the main reasons for the lower
output.
November 25, 1997, was the official starting
date for the 1997-98 crop. Plans were to increase
yields through a program to replace low-yielding
rootstocks. Reportedly, the program was hampered
by lack of fuel, deterioration of machinery, and
absenteeism among the workforce. Recent estimates
place the 1997-98 sugar production at less than 4
million tons.
Cuba's sugar production represents only a small
percentage of the world's total output, currently less
than four percent of the total 114 million metric tons.
However, in terms of trade, it accounts for a much
larger percentage and has a significant impact on
world prices. That is because, unlike larger
producers such as Europe and Australia, Cuba retains
only about 200,000 metric tons of its crop for
domestic use.
Sales overseas of the remaining output of
Cuba's sugar production exceeds 13 percent of the
total world sugar exports—more than three times
Cuba's share of total world sugar production. Even
with lower production of sugar in recent years, Cuba
remains one of the world's largest sugar
exporters—after the European Union, Australia, and
Thailand.
Due to lack of sugarcane production, outdated
equipment, and lack of repairs, a number of Cuba's
156 sugar mills are not in operation. Unless
sugarcane production recovers and sugar mills are
updated, it may be difficult for Cuba to repay the
acquired foreign loans from foreign exchange earned
through sugar exports. However, in spite of the tight
credit situation, official guarantees have been
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Cuba: Foreign Agribusiness Financing and Investment
obtained recently from South Africa. A South
African company is to provide diesel engines valued
at $80 million for the sugar industry.
The only joint venture in sugar and derivatives is
a project, announced in 1997, to produce alcohol
from sugar molasses. The Cuban-Spanish project
reportedly is valued at $65 million. Production began
at the end of 1998, with capacity at 150,000
hectoliters of alcohol a year. The plant to refine
sugar molasses is located at the Antonio Sanchez
sugar mill in the province of Cienfuegos.
Other Agricultural Crops
As a result of efforts to reduce agricultural
imports and to supply the tourist hotels, Cuba has
opened investments in agriculture for non-export
crops such as rice and beans (Table 5). Negotiations
to form economic associations in the production of
rice and beans, as well as animal feed, dairy
products, and other non-export items, are said to be
well advanced. Reportedly, more than 200 foreign
firms have discussed new non-export agricultural
investment opportunities with Cuban officials.
A British company was reported in 1995 to have
signed an agreement to fund rice production in the
provinces of Pinar de Rio and Sancti Spiritus. Rice
production in recent years is estimated at
approximately one-half of the record harvests
recorded in the late 1980s.
China's Xintian Corporation for International
Cooperation is working with Cuba's Fernando
Echenique Agroindustrial Complex in the province
of Granma to increase rice yields. The "experimental
farm" is to operate for three years—six harvests—on
200 hectares. Four Cuban and three Chinese
specialists direct operations. Also, a letter of intent
has been signed for the creation of a Chinese-Cuban
joint venture to produce rice on 5,000 hectares,
pending results of the experimental farm.
13
strawberries, green peppers, and other vegetables can
be grown for the export market and for sale to the
tourist industry in Cuba. The agricultural company
formed by Sherrit International is known as Sherrit
Green. Strawberries and other products from the
farm, according to secondary sources, are being
served in the tourist hotels at Varadero.
Production of cotton and tomatoes in Pinar del
Rio is being supported by Spain, primarily through
the Spanish Agency for International Cooperation.
The project is known as the "Project for
Development of Rural Integration." Among the
resources reported to be valued at $3,976,000, will be
high quality seeds, tractors, harvesting machinery
and systems for leveling land, with laser beams. The
project also includes a cotton gin and a tomato
processing plant.
Another international economic association
involves the production of African palm on 20,000
hectares. FACUSSE Foods of Honduras reportedly
is providing $100 million over seven years to finance
inputs and manufacture soap using the palm oil.
Recently, the Union de Acopio, which is
attached to the Ministry of Agriculture, has
announced its interest in finding foreign partners for
the production of fresh tomatoes and the marketing
abroad of tomato concentrate. The foreign
investment required is $3 million, preferably through
a joint venture. The Union de Acopio is also seeking
a foreign partner for the production and marketing
abroad of fresh potatoes, to be produced on 500
hectares. The foreign investment required is $1.5
million, preferably through a joint venture.
Also, Cuba has recently opened its forestry
sector to foreign investment. A chronic deficit of
industrial lumber has caused the Cuban government
to study numerous projects for increasing output and
modernizing the forestry sector.
Livestock and Poultry
Sherritt International, a Canadian company that
mines nickel-cobalt in a joint venture near the eastern
tip of Cuba, has also established an experimental
farm. Horticulturists from Canada are assisting with
farm operations. The objective of the 80-hectare
farm, located near Cardenas, is to demonstrate how
A Cuban-Vietnamese joint venture in cattle and
swine was inaugurated in Ninh Binh in June 1997.
The Vietnamese enterprises, Phung Thuong and Don
Giad, are contributing two-thirds of the $8.6 million
initial investment. Bacuranao, a Cuban cattle
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Cuba: Foreign Agribusiness Financing and Investment
14
enterprise, is contributing the remainder (Table 6).
The joint venture was created for the production of
livestock and processing pork and beef, primarily for
the tourist trade. High-quality semen is also to be
produced for herd improvement.
Cuba's Union de Bebidas y Licores to produce
bottled water for the domestic market.
Foreign investment is being encouraged for
poultry production. Cuba's Union de Empresas
Combinado Avicola Nacional is seeking foreign
partners to increase poultry production in the
provinces of Matanzas, Villa Clara, and Granma.
Foreign capital will be used for the improvement of
facilities and the purchase of poultry feed,
pharmaceuticals, and other supplies. The requested
investment is to be negotiated directly, and could be
either a joint venture, an economic association
contract or a cooperative production agreement.
While there currently is significant foreign
investment in Cuba's agriculture, prospects for
substantial agribusiness investment are directly
linked to U.S.-Cuban relations. The vast size of the
U.S. market, its high per-capita consumer income
and past experience by U.S. firms in Cuba, will
likely affect agribusiness investments in Cuba when
relations are normalized between the two countries.
Processed Foods and Beverages
In addition to the international economic
associations involving agricultural production, there
are a number of other economic associations
involving the processing of agricultural products.
The products include processed foods, bottled water,
rum, and beer (Tables 7 and 8).
Food processing companies include Metzler of
Canada. This joint venture, established in 1994,
produces instant drinks, pasta, hot chocolate,
crackers, soda biscuits, etc. in Havana. Other food
processing companies include Confitel S.A., a joint
venture with Russia. The firm produces cookies and
candies. CONAICA, a Cuban-Spanish operation,
produces caramelos of all types. Empresa Confitera
Gamby is a Cuban-Italian operation started in 1995.
The company produces a line of pastas for the dollar
trade at tourist hotels.
Beverage manufacturing companies include
Ciego Montero, a joint venture with Spain selling
bottled mineral water. Labatt International of
Canada has an agreement to produce Hatuey beer in
Cuba. Also, the Succex Admiral group of Canada
has agreed with the state-owned Cuban brewer
Hatuey to bottle the beer bearing the Caribbean Ice
label. The Pernod Ricard Group of France has an
economic association to market Cuban rum
worldwide and Pernod Ricard products in Cuba.
Italy's San Pellegrino Group has a joint venture with
Considerations for Potential
Agribusiness Investment
Bilateral Relations
Bilateral relations between the two countries
deteriorated sharply following Fidel Castro's
assumption of power in 1959. In 1961 the United
States broke diplomatic relations and imposed
sanctions on trade and financial relations in 1962.
U.S. economic sanctions—the Cuban Assets Control
Regulations issued by the U.S. Government on 8 July
1963 under the Trading With The Enemy Act—are
still in force.
Provisions of the sanctions have been amended
several times. Recent amendments include the
Cuban Democracy Act, legislated in 1992. The Act
tightened trade sanctions by limiting trade by
third-country subsidiaries of U.S. companies and
permitted the President to impose sanctions on allies
who trade with Cuba. Legislation passed in 1996, the
Cuban Liberty and Democratic Solidarity Act,
strengthened sanctions on the Cuban government.
As a result of the legislation, also known as the
Helms-Burton legislation, there is no prospect of
U.S. agribusiness investment in Cuba until there is a
major change in U.S.-Cuban relations.
Agribusiness Investment Consideration
Cuba's ability to take advantage of its unique
offerings to foreign agribusiness investors has been
hampered, not only by lack of access to the U.S.
market, but also by inadequate foreign investment
incentives, poor management of the agricultural
sector, and infrastructure development needs, among
other factors.
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Cuba: Foreign Agribusiness Financing and Investment
In a period without U.S. economic sanctions,
Cuba will have the potential to offer unique
opportunities to foreign agribusiness investors such
as geographic proximity to the U.S. market, a
growing tourist industry that requires high-quality
products, proximity to markets for tourist hotels and
restaurants in the Caribbean, a highly educated and
under-employed work force, fertile soils with the
largest area for agricultural production of any island
in the Caribbean, and a population of 11 million with
a pent-up demand for better quality foods and
diversity in their diets.
Agribusiness opportunities will depend largely
on three principal factors: the degree of Cuba's
openness to agribusiness trade and investment,
effective domestic demand and competition within
Cuba, and international markets.
Openness to Agribusiness Trade and
Investment. The first factor is perhaps the most
important and least predictable of the three. Cuba's
decision to open its borders to foreign investment
under Law No. 77 was born of economic necessity. It
was not an enthusiastic political decision. Cuban
policies reflecting the degree of openness to trade and
investment in a period without U.S. sanctions are
likely to be affected equally by politics and
economics. The Cuban government, in an effort to
stimulate foreign investor interest, may consider
removing policy barriers that now inhibit foreign
investment. It may earnestly invite foreign
agribusiness investment in an attempt to regain and
increase former production and export levels.
Effective Domestic Demand. The second
factor, effective domestic demand, is more
predictable. It seems foreseeable that, in a situation
without U.S. sanctions, there will be pent-up demand
in Cuba for diversified and higher quality foods—the
products of agribusiness. The decline of the
agricultural sector in Cuba since 1959 is well known.
Production on a per-capita basis of many food items
has fallen from the 1959 production level, e.g. milk,
pork, beef, poultry meat and eggs, corn, beans, rice,
and sugar. At the same time, Cuba's population has
grown from 6.7 million in 1959 to over 11 million.
Consequently, there has been an increase in the need
for food supplies of more than 60 percent, merely to
15
maintain the same food consumption level as
sustained 39 years ago.
For some agricultural products, output has
fallen by as large a percentage as the population has
increased. Corn production, for example, has not
only failed to keep pace with population growth, it
has fallen to about one-fourth the per-capita level
existing before the revolution. In addition, the
elimination of Soviet assistance and lack of foreign
exchange to import has resulted in less feed for
animals. As a result, there has been a decreased
production of animal proteins, especially beef and
veal. These are food products that are consumed in
larger quantities as incomes rise. Also, because of
lower sugarcane production, there has been less
foreign exchange earned from agricultural exports to
import food products. Based on data for 1951-55,
Cuba was the number one country in the world for
sugar production, accounting for 15 percent of the
world's supply. Some 40 years later, Cuba ranks
eighth among all countries and accounts for less than
four percent.
With lower per-capita production levels and less
foreign exchange to import food, there is bound to be
a pent-up demand in Cuba for higher quality foods
and greater choice of food products. The real
question is not whether there will be an increase in
demand for food, but rather will there be an increase
in effective demand.
Will the Cuban consumers have money to buy
the products generated by foreign agribusiness
investment? It is widely believed that following the
lifting of U.S. economic sanctions there will be a
substantial capital inflow combined with the
introduction of new technologies. An infusion of
capital and technology will provide the basis for
increased productivity. Under normalized trade and
economic relations and expanded foreign investment,
there will be a favorable setting for increased
employment opportunities, higher wages, and a
significant and steady rise in personal real income.
These factors should combine to give Cuban
consumers more money to buy agricultural products,
including more processed and higher value foods.
Domestic and Foreign Competition. The third
factor, competition, also appears predictable. There
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Cuba: Foreign Agribusiness Financing and Investment
will be substantial competition in Cuba from current
foreign agribusiness traders and investors and from
foreign firms with products in the markets abroad
where Cuban products might be sold. Foreign
agribusiness companies already established in Cuba,
such as those from Europe and Canada, will have an
advantage over U.S. companies new to the market.
But, it is also likely that they will increase their
investments in a period when the U.S. market is open
to Cuban products. The mixed-capital companies
that have had substantial experience in the Cuban
market will be strong competition for new
agribusiness investors. However, companies with
proven records of efficiency and substantial capital
backing will have an opportunity to become
competitive. Companies that can produce for both
the Cuban domestic market and the export market
will be especially competitive.
Conclusion
It is the conclusion of these authors that
re-opening U.S.-Cuban trade could be very
beneficial to both U.S. and Cuban agricultural
markets, but does not appear likely to occur any time
soon. For Cuba to revitalize its economy, it will be
necessary for it to change its current policies and to
increase its participation in world markets.
References
Business Tips on Cuba. A publication of the
Cuban National Office of the Technical and
Commercial Information System (TIPS), the United
Nations Development Program (UNDP), and the
non-profit Development Information Network
(DEVNET). Havana, Cuba. Various issues.
Caribbean Basin Commercial Profile. A joint
publication of Caribbean Publishing Co. Ltd. and
Caribbean Latin American Action. Grand Cayman,
Cayman Islands, D.W.I., 1996.
Caribbean UPDATE. Published monthly by
Caribbean UPDATE, Inc., Maplewood, NJ. Various
issues.
Cuba Foreign Trade. Cuba Chamber of
Commerce. No. 1, 1996.
16
Cuba Monthly Economic Report. DevTech
Systems, Inc. Washington, DC. Various issues.
Cuba News. The Miami Herald Publishing
Company, Miami, Florida, Various issues.
Economics Press Service, "Informacion
Quincenal Sobre Cuba," Ano 9, No. 4, 29 de Febrero
1996, La Habana.
Granma International. May 1, 1996. p. 13.
La Sociedad Economia. "An Index of Foreign
Investment in Cuba." Bulletin No. 43, September
1994.
Messina, William A. Jr. "An Overview of
Cuba's Agricultural Sector Prior to the Special
Period" in Foreign Investment in Cuba: Past, Present
and Future. Proceedings from Shaw, Pittman, Potts
and Trowbridge Cuba Transition Workshop. Oceans
Publications. January 1996.
Pena Castellanos, Lazaro and Jose Alvarez. The
Processing Sector of the Sugar Industries of Cuba
and Florida. IW97-18, Department of Food and
Resource Economics, University of Florida,
Gainesville, Florida, December 1997.
Shaw, Pittman, Potts and Trowbridge.
Free-Market Cuba Business Journal, Volume 3,
Number 2, Spring 1995.
Shaw, Pittman, Potts and Trowbridge and
Oceana Publications, Inc. Papers presented at a
workshop on "Foreign Investment in Cuba: Past,
Present and Future." Washington, D.C. January
26,1996.
The Cuba Report. Cuba Newsletter Inc., Miami,
Florida. Various issues.
The Economist, A Survey of Cuba, April 6,
1996.
Additional Notes:
3. Zuáznabar Ismael y Gonzálo M. Rodríguez: “La economía
cubana en la década del 50" y “El proceso de industrialización de la
Economía cubana” respectivamente.
4. Ley No. 77, Ley de la Inversión Extranjaera, publiciación oficial.
Archival copy: for current recommendations see http://edis.ifas.ufl.edu or your local extension office.
Cuba: Foreign Agribusiness Financing and Investment
18
Table 1. Cuba: Foreign financing and investment in citrus production and processing.
No.
Cuban Agency
Foreign Firm
Year Started
Investment
Major Activity
(Brand Name)
1
Corporacion
Nacional de Citricos
BM Group
Israel
1960s
and renewed
1990
Economic
Association
$22M
37,750 ha.
Jaguey Grande
(Cubanita)
2
Corporation Nacional
de Citricos
INGELCO
Chile
1992
Economic
Association
Processing 30 million liters
Jaguey Grande
(Tropical Island)
Table 2. Cuba: Citrus foreign financing and investment projects terminated in 1996.
No.
Cuban Agency
Foreign Firm
Year
Started
Investment
Major Activity
1
Corporacion
Nacional de
Citricos
Pole S.A.
Chile
1991
Economic
Association
Produce and market grapefruit
11,000 ha.
Isla de la Juventud
2
Corporacion
Nacional de
Citricos
Lola Fruit, S.A.
Greece
1993
Joint Venture
Produce, market and process
31,000 Ha.
9 Plantations, Ciego de Avila
Table 3. Cuba: Foreign financing and investment in tobacco production and manufacturing.
No.
Cuban Agency
Foreign Firm
Year
Started
Investment
Major Activity
1
Cuba Tobacco
Tabacalera, S.A.
Spain
1993
$25M per
year
Finance inputs and market
21,875 ha.
Pinar del Rio
2
Cuba Tobacco
Seita
France
1994
$3.5M - $4M
Line of Credit
Finance inputs and market
Tobacco products
3
Cuban Tobacco
Union
Souza Cruz Brazil
1996
$10M
Joint Venture
15,000 cigarettes per minute
Archival copy: for current recommendations see http://edis.ifas.ufl.edu or your local extension office.
Cuba: Foreign Agribusiness Financing and Investment
19
Table 4. Cuba: Foreign financing and investments in sugarcane production, processing and derivatives.
No.
Cuban Agency
Foreign Firm
Year
Started
Investment
Major Activity
1
Ministry of Sugar
Industry
European banks and
trade houses
1995-96
1996-97
1997-98
$100M +
Short-term line
of credit
Pre-finance, inputs,
petroleum, fertilizers
and spare parts
2
Ministry of Sugar
Industry
South African
Company
1997
$80M Credit
guarantee
Diesel Engines
for the sugar industry
3
Ministry of Sugar
Industry
Alfisca
Spain
1997
$65M Project
Production of alcohol
from molasses
150,000 hectoliters/year
Table 5. Cuba: Foreign financing investment in agricultural commodities other than citrus, tobacco and sugar.
No.
Commodity
Foreign Firm
Year
Started
Investment
Major Activity
1
African palm
Facusse Foods
Honduras
1995
$100M
over 7 years
20,000 ha.
African palm, vegetable oil
and soap manufacturing
2
Rice
Corporation for
International Cooperation
China
1996
Experimental
farm
Production 200 ha. Granma
3
Rice
United Kingdom
1995
Pre-financing
inputs
Production
Pinar del Rio
Sancti Spiritus
4
Strawberries
and vegetables
Sherritt Green
Canada
1995
Experimental
farm
80 ha. produce
for tourist hotels
5
Tomatoes and
corn
Agency for
International Cooperation
Spain
1996
$4M
Seeds, tomato plants,
cotton and gin
Pina del Rio
Archival copy: for current recommendations see http://edis.ifas.ufl.edu or your local extension office.
Cuba: Foreign Agribusiness Financing and Investment
20
Table 6. Cuba: Foreign financing and investment in livestock and poultry.
No.
Cuban Agency
Foreign Firm
Year
Started
Investment
Major Activity
1
Bacuranao
Phung Thuong
and Don Giad
Vietnam
1997
2/3 of $8.6M
project
Production and
processing pork and
beef; semen
2
Union de Empresas
Combinado Avicola
Nacional
Seeking foreign
partners
Future
Foreign capital
for feed supplies,
etc.
Poultry production
Table 7. Cuba: Selected foreign financing and investment in processed foods.
Foreign Firm
Year Started
Type of Investment
Major Activity
Metzler
Canada
1994
Joint Venture
Instant drinks, crackers, hot chocolate,
pasta, soda biscuits, etc.
Confitel
Russia
1993
Joint Venture
Cookies and candies
Conaica
Spain
1994
Joint Venture
Caramelos of all types
Confitera-Gamby
Italy
1995
Joint Venture
Pastas for dollar stores and tourist hotels
Table 8. Cuba: Selected foreign financing and investment in beer, rum and mineral water.
No.
Cuban Agency
Foreign Firm
Major Activity
1
Hatuey and Cristal
Labatt International
Canada
Producuce Hatuey Beer in Cuba
2
Cuba's "Ron and Licores"
Pernod Ricard Group
France
Market Cuban rum worldwide and
Pernod Ricard products in Cuba
3
Union de Bebidas y Licores
Sam Pellegrino Group
Italy
Bottled water for domestic market
Archival copy: for current recommendations see http://edis.ifas.ufl.edu or your local extension office.
Cuba: Foreign Agribusiness Financing and Investment
21
Table 9. Cuba: Foreign investment opportunities in agribusiness promoted by the Cuban government.
Major Activity
Production of water irrigation systems.
Commercialization of technical projects and services.
Production renewal of motors in tractors and transportation equipment.
Development of equipment for the protection of plants.
Technology in the advancement of cultivation.
Opportunities in the area of forestry.
Production and marketing different varieties of guava.
Production and commercialization of seed potatos, ecological fruits and vegetables.
Exportation of papaya seeds of the Red Maradol variety, tomatoes, cucumbers and pimentos.
Financing for rice.
Production for tourism.
Production and commercialization of fresh papayas.
Production of cheese through the cheese factory in the Sibanicu municipality.
Porcine and fowl production.
Production of Bird meat.
Processing of duck and goose.
Production of tomato concentrate.
Exportation and importation of selected fruits (contracted via an Economic Association).
Production of fruit nectars through the La Conchita Factory.
Production of citrus fruits for export, fresh as well as canned.
Production of citrus fruits for export, fresh as well as canned
(represents excellent opportunity for establishment of business with Cuban producers).
Potential in this area has been studied and is based on the fresh produce of the last few years
supported by capital om other sources.
The crop of 1996, compared to that of 1995, grew by more than 98,000 tons.
Table 10. Cuba: Company proposals for food processing.
Company
Product
Dona Delicias Commercial Group
Jams
Vita Nova
Tomato pastes and sauces
Tropical
Fruit jams
Taoro
Mango juice and jams
La Matilde
Mayonnaise
Don Felo
Oil
Hola
Coffee
Archival copy: for current recommendations see http://edis.ifas.ufl.edu or your local extension office.
Cuba: Foreign Agribusiness Financing and Investment
23
Table 13. Cuba: Imports of selected cereals and livestock products.*
Product
1981-1989
(annual average)
Corn, not for human consumption
some 450,000 tons
Wheat, not for human consumption
some 500,000 tons
Barley, not for human consumption
some 40,000 tons
Oats, not for human consumption
some 15,000 tons
Lard
some 75,000 tons
Condensed milk
some 20,000 tons
Powdered milk
some 35,000 tons
* Products imported to meet domestic demand—cheeses, butter, cereals
requiring milk, cereals not requiring milk, meats hermetically sealed, other
preserved meats and fresh fowl.